[2023 National Assembly Audit] Adding 'Employment Stability' to BOK's Monetary Policy Goals? Lee Chang-yong Says "Not Universal"

On the 23rd, at the Bank of Korea in Jung-gu, Seoul, Governor Lee Chang-yong is drinking water during the National Assembly's Planning and Finance Committee's audit of the Bank of Korea.
[Photo by Yonhap News]

Lee Chang-yong, Governor of the Bank of Korea, stated that regarding the argument to add employment stability as a goal of the Bank of Korea's monetary policy in addition to price stability, "It is generally not included based on global standards."

Governor Lee made this remark on the 23rd during the National Assembly's Planning and Finance Committee audit held at the Bank of Korea headquarters in Jung-gu, Seoul, in response to a related question from Ryu Seong-gil, a member of the People Power Party.

Article 1 of the current Bank of Korea Act defines the purpose and policy goal of the Bank of Korea as "price stability" and specifies that attention must be paid to financial stability when conducting monetary and credit policies.

Assemblyman Ryu has proposed an amendment to add employment stability as a goal of the Bank of Korea's monetary policy alongside price stability.

He explained, "(The amendment) is to include employment stability in the Bank of Korea's purpose provisions, just like other countries, not only price stability," adding, "The Bank of Korea should not only focus on price stability but also on employment stability."

He further pointed out, "Most scholars and the Bank of Korea say that since the means are singular, how can two goals be achieved? However, I believe it is possible if the Phillips curve is clearly demonstrated."

The Phillips curve is an economic theory explaining that as inflation rises, the unemployment rate decreases.

However, Governor Lee said, "When we discuss this, we need to see what advantages are gained by diluting the goal of price stability and pursuing the other (employment stability)," adding, "There is much debate."

He continued, "Based on global standards, it is generally not common to include employment stability as a central bank's objective," and said, "Except for the U.S. Federal Reserve (Fed), no central bank includes the economy even indirectly. Generally, financial stability and price stability are the goals."